Energy Business

4 Exploration and Production Stocks With Up to 100% or More Upside Potential

Gulfport Energy

This is the top pick at SunTrust and also offers tremendous upside potential. Gulfport Energy Corp. (NASDAQ: GPOR) is an independent oil and natural gas E&P company with its principal producing properties located in the Utica Shale of Eastern Ohio and along the Louisiana Gulf Coast. In addition, Gulfport holds a sizable acreage position in the Alberta Oil Sands in Canada through its 24.9% interest in Grizzly Oil Sands.

SunTrust notes that the bonds have seen a solid 41% outperformance year to date and 14% over the past 30 days. Gulfport is also a favorite of hedge fund managers. In fact, according to Insider Monkey, 36 hedge funds currently own positions in the stock.

The SunTrust price target is $60, and the consensus target is much lower at $44.36. The stock closed Monday at $25.42.

Southwestern Energy

This company surprised analysts earlier this year when it actually raised their capital expenditure budget for 2015. Southwestern Energy Co. (NYSE: SWN) explores, develops and produces natural gas and oil in the United States.

Southwestern has invested heavily in the Marcellus play, where it holds leases in approximately 337,300 net acres. Reports indicate that the company has increased its acreage in the Marcellus Shale in Pennsylvania by acquiring interest from other stakeholders. Southwestern’s gas production increased to 766 Bcf in 2014 from 656 Bcf in 2013. This will provide the company exposure to a play with a low cost structure and additional acreage.

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The company also is involved in the gathering, marketing, and transporting natural gas, and oil and natural gas liquids. As of December 31, 2014, Southwestern had pipelines of 2,017 miles in Arkansas, 105 miles in Pennsylvania, 25 miles in Texas, and 16 miles in Louisiana in its gathering systems.

The bonds have seen an incredible 50% outperformance year to date and 8% over the past 30 days.

The SunTrust price objective is $17, and the consensus target is higher at $19.30. The stock closed Monday at $9.01

Whiting Petroleum

This is North Dakota’s largest oil producer and another top stock to buy now. Whiting Petroleum Corp. (NYSE: WLL) is an independent oil and gas company that explores for, develops, acquires and produces crude oil, natural gas and natural gas liquids, primarily in the Rocky Mountain and Permian Basin regions of the United States. Its largest projects are in the Bakken and Three Forks plays in North Dakota, the Niobrara play in northeast Colorado and its Enhanced Oil Recovery field in Texas.

By year’s end, the company expects to continue to sell non-core assets. The assets it already has sold this year total $300 million and were much less productive than its Williston Basin assets. Whiting has stated that by increasing sand volumes in wells located in North Dakota, it has increased well productivity over other wells drilled in the same area by as much as 40% to 50%. The company bonds have seen 49% outperformance year to date and 8% over the past 30 days.

The SunTrust price target is $35, and the consensus target is $27.78. The stock closed Monday at $16.51.

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The advantage for equity investors is that bond traders and investors generally are tracking who will stay solvent and continue to pay the coupons on current bonds. The outperformance of the debt now could bode well for the equity in 2016 and beyond.

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